China’s central government listed “boosting consumption…and stimulating domestic demand” as its first “major task” for 2025, at the recently closed “two sessions”.
As part of this focus – and amid slowing economic growth – the State Council made specific mention of China’s “two new” (两新) policy.
The policy was first announced in 2023, but was heavily promoted last year. President Xi Jinping reportedly “stressed the importance” of a national recycling company as part of the policy in 2024, because it “facilitates green, low-carbon and circular development”.
Carbon Brief explains what the policy is, how it works and what its impact will be. An abridged version of the article appeared in China Briefing on 20 March.
What is ‘two new’?
The “two new” policy is short for “large-scale equipment upgrades and trade-in of consumer goods”. It is designed to boost domestic demand to prop up growth, at the same time as improving the efficiency of equipment so as to lower emissions.
According to the Communist party’s leading magazine on ideology Qiushi, the idea was first raised in 2023 at an economic conference held by the State Council for “improving technology, energy consumption, emissions and other standards”.
It became well-known after Xi reiterated the idea in early 2024. In March 2024, the policy then became an “action plan – a document illustrating specific methods for executing a political goal.
Prof Bai Quan, director of energy transition at the Academy of Macroeconomic Research – a research institution under the direct supervision of the State Council – told Carbon Brief in 2024 that there are four aspects of “two new”:
- Updates to equipment such as large boilers, turbines, heat pumps and lighting used for manufacturing;
- Trade-in of consumer goods, including fridges and air conditioners;
- Recycling of old or high-emission items;
- Improving standards for product efficiency and emissions, as well as for recycling, “to prevent people from re-purchasing outdated equipment with low energy efficiency”.
He added that the first three aspects directly “promote carbon reduction” and the last one “indirectly serves energy saving and carbon reduction goals”.
Under the policy, government subsidies are provided for manufacturers and consumers to trade-in old inefficient goods and purchase new ones. Other financial and tax support is given to recyclers to increase recycling.
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In 2025, the State Council updated the “two new” policy and increased the funds available to consumers and businesses.
It also expanded the range of trade-in products, adding more and older petrol cars for instance, as well as pledging to release a more detailed trade-in standard covering 294 items by the end of the year.
Li Gang, an official from the Ministry of Commerce, is quoted by the state news agency Xinhua saying at the press conference on the expansion that it would “help stimulate consumer spending and boost domestic demand. All enterprises, domestic or foreign-funded, private or state-owned, are welcome to participate in the scheme.”
How does equipment upgrade work?
A fundamental mechanism of “two new” is providing funding that enables consumers and businesses to trade-in and upgrade goods, as well as recycling the old equipment.
For example, under the policy, a consumer can trade in an old, inefficient petrol car and receive subsidies to upgrade to a new electric vehicle (EV) instead.
The government “work report” delivered by premier Li Qiang at the “two sessions” says that “ultra-long special treasury bonds totaling 300bn yuan ($41bn) will be issued to support consumer goods trade-in programmes” in 2025.
Meanwhile, another 700bn yuan ($96bn) will be allocated for a sister programme, known as “two major [projects]” (两重), which supports infrastructure construction, including roads and railways.
In a more detailed “two new” paper, the State Council says it will provide about 90% of the funds and the rest shall be covered by local governments.
A sum of cash will be given when old “high-emission” goods, such as ships, trucks, tractors and buses, are sent for recycling, depending on the age and emission levels. Some discounts will also be given when purchasing new lower-emission replacements.
Separately, companies can apply for a low-interest loan for large-scale equipment upgrades.
The State Council paper also eases the rules around low-interest loans for equipment upgrades, making it easier for small and medium-sized enterprises to access them.
According to the paper, projects that can apply funds from the cash pool include “equipment renewal in the field, as well as energy conservation, carbon reduction and safety transformation in key industries”, such as transports and agriculture.
The policy also allocates around 7.5bn yuan ($1bn) for the “recycling and treatment of waste electrical and electronic products”. This extends beyond the list of trade-in items.
How does ‘two new’ support recycling?
As the world’s largest renewable energy producer, China has so far built some 1,408 gigawatts (GW) of wind and solar capacity. About 35m tonnes of waste from decommissioned wind and solar equipment will need to be recycled in China by 2030.
A research paper in the journal Waste Management suggests building up sufficient capacity to recycle this waste could generate “significant economic benefits”.
However, Shanghai-based outlet the Paper reports that only a limited number of recyclers are on the market, due to the high costs and long payback periods.
Despite Beijing issuing policies in 2023 and 2024 to encourage businesses, a stronger recycling market is needed for “advancing” the “two new”, according to prof Du Huanzheng, director of the Circular Economy Research Institute of Tongji University.
In 2024, a state-owned recycling company, China Resources Recycling Group, was established to handle scrap steel, EV batteries and decommissioned renewable energy equipment.
But “challenge[s]” remain for private recyclers, Bai told Carbon Brief. One obstacle is missing a “first receipt”, which is the purchase receipt from manufacturers that enables recyclers to claim value-added tax deductions, he said.
A supporting policy for the “two new” from 2024 allows qualified recyclers to use their purchasing invoice in place of “first receipt” for tax claims.
Bai said this policy “solved the problem” and “is a very important incentive to meet the 2027 goals” of the “two new” policy.
The 2027 goals, written by the State Council, include a 25% increase in new equipment investment across key sectors and a doubling in the share of cars being recycled:
“By 2027, the scale of equipment investment in industries such as industry, agriculture, construction, transportation…will increase by more than 25% compared with 2023; the energy efficiency of major energy-consuming equipment in key industries will basically reach the energy-saving level, and the proportion of production capacity with environmental protection performance reaching Class A will be greatly increased…The amount of scrapped cars recycled will increase by about one-fold compared with 2023.”
How does trade-in work under ‘two new’?
Li Shuo, director of China Climate Hub at the Asia Society Policy Institute (ASPI), tells Carbon Brief that this is not the first time China used subsidies and “similar initiatives” to “stimulate consumption, address product oversupply and enhance energy efficiency”.
In 2025, the categories of eligible trade-in goods under “two new” is expanding from eight to 12, including mobile phones and fridges that are closely related to daily usage. Up to 500 yuan ($70) subsidies apiece can be applied when purchasing new digital products from 2025.
Electric vehicles (EVs), which can greatly decarbonise road transport, remain on the list. In addition, scrappage subsidies have been extended to more and newer types of petrol cars – including cars registered from 2012-14 rather than 2011-2013.
Li adds that the latest expansion of the policy “highlights the rapid pace of industrial upgrades in China and the mutually reinforcing dynamics of industrial productivity, a favorable regulatory framework, and the sheer scale of the Chinese market”.
Bloomberg says that “the cash-for-clunkers program gave a big boost to sales – especially of EVs and hybrids – after its introduction last year” and “manufacturers and investors had been eagerly waiting to see whether the subsidy” would be renewed in 2025.
The buyer rebates for vehicles, including EVs and more efficient petrol cars, remain at the same level as in the second half of 2024, after a rise last August.
Buyers can receive up to 20,000 yuan ($2,730) for EVs and plug-in hybrids or 15,000 yuan ($2,073) for petrol cars with an engine smaller than two litres.
(The Chinese EV industry receives a complicated range of subsidies, read more in Carbon Brief’s Q&A on the sector.)
What is the impact?
Xinhua says that the trade-in scheme boosted sales of cars in 2024, with new energy vehicles (NEVs, mainly EVs and plug-in hybrids) accounting for more than 60% of the new vehicles bought under the initiative in 2024.
Meanwhile, products certified with the “highest energy-efficiency level” made up more than 90% of sales by revenue under the home appliance trade-in scheme, adds the report.
An analysis by Goldman Sachs says the trade-in subsidies have “accelerated” the rising share of NEVs in Chinese car sales. It says the policy will help raise the NEV share from 48% in 2024 to about 60% in 2025.
Subsidies for NEVs under “two new” have amounted to 90bn yuan ($12bn), accounting for about 60% of the total “trade-in money”, according to Goldman Sachs.
In his 2024 analysis for Carbon Brief, Lauri Myllyvirta, lead analyst at the Centre lead analyst at the Centre for Research on Energy and Clean Air (CREA), wrote that the trade-in subsidy scheme would “free up household cash for other types of spending, but it also directs household spending in the most energy-intensive direction”.
He tells Carbon Brief that the policy, after the 2025 expansion, is still a “much more limited measure than the kinds of income transfers that would be needed to substantially boost the role of household consumption in driving economic growth”. He adds:
“[It] targets the most energy-intensive part of household spending, purchases of energy-intensive manufactured goods, while leaving out spending on services and other less energy intensive sectors.”
Lynn Song, chief economist for Greater China from market research firm ING, tells Carbon Brief that it is “hard to quantify [the impact of ‘two new’] until we have more specifics rolled out such as what level of subsidies will be applied”. He says:
“The 300bn budget for the programme sounds a little small at first thought – under 1% of total retail sales last year – but it will boost sales beyond the 300bn [yuan] spent, so it should result in a fairly significant bump in my view.
“Looking at last year’s performance once the policies started ramping up in the second half of the year, we saw autos and home appliances easily outperform the headline retail sales growth.”
Song adds that the trade-in subsidies under “two new” can “lead to improved demand for these categories this year”.
In his 2024 interview with Carbon Brief, Bai called the “two new” a “sign” of the government using policy support to stimulate lower-carbon consumption. He added:
“Another vital policy is the ‘guidelines to ramp up green transition of economic, social development’… It is a blueprint of China’s transition in industry, building [construction], transportation, energy and many other areas. Together with the ‘two new’, which is an implementation document for this top-level design, we now have both a direction and a manual for the energy transition.”
The guideline aims to “achieve ‘remarkable results’ in the green transition” by 2030 and establish a “green, low-carbon and circular development economic system” by 2035.
(Read more about the guideline in China Briefing.)
An official release says that the “two new” policy “saved about 28m tonnes of standard coal and reduced carbon dioxide [CO2] emissions by about 73m tonnes” in 2024. It says the “effect” of supporting the low-carbon transition was “obvious”.
The post Q&A: How China’s ‘two new’ policy aims to help cut emissions appeared first on Carbon Brief.
Q&A: How China’s ‘two new’ policy aims to help cut emissions
Israel’s bombardment of Gaza during the conflict that broke out in October 2023 has wrecked progress towards adapting the enclave to climate change and left two million Gazans vulnerable to heatwaves, drought and disease, the Palestinian Authority (PA) said in a new climate plan submitted to the United Nations.
Palestine’s third nationally determined contribution (NDC), uploaded to the UN climate body’s website this week, says that while “the aggression on the Gaza Strip did not make the climate worse”, “it removed the housing, water and sanitation systems, health facilities, energy networks, roads and livelihoods through which people absorb a climate they were already struggling with.”
The 91-page document lists the types of infrastructure it says Israel has destroyed and notes how the destruction will worsen the impacts of climate change. It says the bombing of hospitals and rising hunger have make it harder for Gazans to cope with the health impacts of climate-driven heatwaves and waterborne diseases.
The destruction of water tanks, boreholes and desalination plants, meanwhile, have left Gazans struggling with the effects of water shortages and drought, while mass unemployment reduces people’s ability to afford climate-driven price rises. The erasure of most of the Strip’s homes makes it more difficult for people to avoid the sun’s increasing heat, the NDC said.
Many Gazans are now living in the ruins of collapsed buildings or in makeshift shelters and tents that offer little or no protection from high temperatures.
Palestine’s previous goals to cut emissions and adapt to climate change in Gaza, expressed in its last NDC five years ago, were based on a pre-war baseline that “no longer describes anything that exists”, the NDC says. Progress made since 2021 has now been destroyed, it adds.
Green reconstruction of Gaza
Instead of continuing to aim for these adaptation and emissions-reduction goals, the PA is now calling for the green reconstruction of Gaza. It says buildings should be constructed again in an energy-efficient manner with solar panels and served with modern water, waste and transport systems.
While the PA, controlled by the Fatah political party, continues to claim legitimate control of Gaza, the strip was effectively governed by Fatah’s rival Hamas between 2007 and the recent war. Control is now split between Israel and the political wing of Islamist militant group Hamas, after a US-backed ceasefire took effect in October 2025, although a UN-backed committee plans to take over.
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The United Nations, European Union and World Bank have jointly estimated that Gaza needs $71.4 billion of investment in the next two years to recover and build back. This process should be Palestinian-led, they said in April.
But US President Donald Trump has said the US should “take over” and “own” Gaza and redevelop it as the “Riviera of the Middle East”. Israel’s right-wing prime minister Benjamin Netanyahu has said that Israel should control the territory with civil administration managed by Palestinians favourable to Israel.
With occupation, targets conditional
In the other part of Palestine, the West Bank, the Palestinian Authority carries out some government functions, but ultimate control rests with Israel, which has occupied the West Bank since 1967.
Because Israel controls planning in most of the West Bank, the NDC argues that the PA cannot pursue all the climate projects it wants. In addition, Israel restricts the movement of PA officials, making data collection difficult, and controls the West Bank’s electricity supply meaning that the PA cannot control whether it comes from dirty or clean sources of energy.
Given this situation, the NDC says that all of Palestine’s new climate targets are conditional but it will aim to reduce emissions 12.8% below a business-as-usual baseline by 2035 and 17.1% by 2040. If the Israeli occupation ends and Palestine regains full sovereignty over its land and resources, it will aim for reductions of 15.1% and 19.1% by 2035 and 2040 respectively under an “independence pathway”.
That could allow, for example, for greater electrification and reducing emissions per unit of growth, the document said.
To achieve the 2035 emissions-reduction target and adapt to the impacts of climate change, the PA says it needs $8.6 billion in total. This funding would be spent on measures like encouraging solar farms and rooftop solar and scaling up solar water heating to cover four-fifths of households. To complement the planned increase in solar power, the authority wants to modernise the electricity grid and install battery storage.
In the transport sector, it aims to promote the uptake of electric vehicles, develop bus rapid transit corridors and scrap old polluting trucks and buses. In Gaza in particular, it wants to deploy 66 electric buses when the conflict ends.
To adapt to climate-driven drought, the NDC includes initiatives to reuse wastewater through treatment plants, build desalination plants in Gaza to remove salt from seawater, and promote irrigation for farmers.
The new climate plan was prepared by Palestine’s Environment Quality Authority, with support from the United Nations Development Programme and the governments of Britain and Spain.
The United Nations recognised Palestine’s statehood in 2012 and it joined the UN’s climate convention and signed the Paris climate agreement – which requires countries to submit more ambitious NDCs every five years – in 2016.
The Israeli foreign ministry did not respond to a request for comment. But in late 2024, then Israeli climate envoy Gideon Behar told Climate Home News that the war and the resulting environmental destruction in Gaza was the fault of Hamas.
The post Palestine: Israel’s bombing has left Gaza vulnerable to climate change appeared first on Climate Home News.
Palestine: Israel’s bombing has left Gaza vulnerable to climate change
Solar power generation in the UK reached a new record over the summer of 2026, as temperatures across the nation soared, according to new analysis by Carbon Brief.
Collectively over June, July and August, solar farms and rooftops generated 8.8 terawatt-hours (TWh) of electricity in the UK*, as shown in the chart below.
Speaking to Carbon Brief, Chris Hewett, chief executive of trade association Solar Energy UK welcomed the new record, adding that it was driven by “clear skies and continued growth in deployment”.
This surge in generation took place amid the hottest summer on record in the UK, with five heatwaves between May and August.
Summer 2026 was the sixth sunniest on record, with more than 620 hours of sunshine, according to the Met Office. England and Wales – which experienced the most extreme heat – saw their second-sunniest summers on record.
June 2026 was the hottest June in England since records began in 1884, according to Met Office data, while Wales and the UK as a whole experienced their second-warmest June.
It was the driest July for England and Wales since records began in 1836, with some parts of London seeing no rain at all in the month, while Wisley in Surrey had no rain for 62 days.
In England, temperatures peaked at 38.1C at Kew Gardens in London on 13 August.
According to the Met Office, this summer’s record mean temperature was made 130 times more likely by climate change.
Amid these hot and sunny months, solar power generation increased 23% from the same period in 2025. This is double the level of solar generation over the summer of 2021, according to Carbon Brief analysis.
While solar panels can be affected by periods of extreme heat, the longer hours of daylight and higher levels of irradiation over the summer more than offset any efficiency losses.
June, July and August all saw solar set new monthly records for solar generation – July saw the highest solar generation in a calendar month ever, with 3.3TWh meeting 15% of overall electricity demand for the month.
As of the end of August, the total UK solar generation in 2026 stood at 17TWh – 13% higher than the same point in 2025.
The number of solar farms and rooftop installations has grown substantially in recent years, helping to boost generation. Domestic rooftop solar accounts for around 29% of total capacity.
In 2025, the UK’s solar capacity reached 21 gigawatts (GW) by the third quarter of the year, according to UK government figures. This is a jump of 3GW, or 18%, year-on-year, as Carbon Brief reported in January.
(Capacity is the maximum output possible from an electricity generation, whereas generation is what was produced over a certain time period, such as a day, month or year.)
According to the University of Sheffield, the installed solar capacity is now nearly 24GW.
This includes nearly 172,000 solar installations that have been fitted across the UK since the start of 2026, according to recent government figures. In July alone, more than 19,800 rooftop solar panels were installed – the equivalent of one installation every two minutes.
In total, nearly 1.7m households in the UK now have solar panels installed.
Over 26 heatwave days this summer – periods of at least three days when temperatures exceed the Met Office’s county-level heatwave temperature threshold – UK households with rooftop solar panels avoided an estimated £86.7m in electricity costs, according to analysis by Utility Bidder.
Talking about the surge in solar generation this summer, Hewett says:
“[It] not only kept bills down for people with solar and batteries in their homes, but helped keep overall power prices much lower than they would have been if Britain had been relying on more gas generation during the day”.
Despite the record generation, no new half-hourly solar power output record was set in the summer of 2026. This still stands at 15.2 megawatts (MW) on 23 April 2026.
* This article refers to the UK throughout, but strictly relates to the island of Great Britain, made up of England, Scotland and Wales. Northern Ireland is part of the separate, all-Ireland electricity system.
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The post Analysis: UK solar power hits record high over summer 2026 appeared first on Carbon Brief.
Farmers around Europe are dealing with the aftermath of a summer of extreme heat, drought and wildfires that were exacerbated by climate change.
Human-caused climate change is increasing the severity and likelihood of many extreme weather events around the world, which is increasing volatility for food producers.
This summer resulted in, for example, shrunken potatoes in the Netherlands, reduced carrot harvests in France, dried-up rice fields in Italy and scorched olive groves in parts of the Mediterranean region.
Global food prices are currently at their highest level since early 2023 due to “heatwaves and energy price dynamics”, according to the UN Food and Agriculture Organization.
Other factors such as blocked fertiliser supplies in the Strait of Hormuz and high fuel costs have also played a role in this year’s agricultural outputs.
In the six charts below, Carbon Brief provides a snapshot of the impact this summer’s extremes are considered to have had on crop production and yields across Europe.
1. Most EU countries expect to see declines in cereal production this year
2. Most countries are recording reduced crop yields
3. Around €2bn worth of cereal losses after June heatwave
4. UK yields of wheat, barley and oats are all due to drop in 2026
5. Maize production in France is due to hit a four-decade low
1. Most EU countries expect to see declines in cereal production this year
France, in particular, will see heavy losses in the amount of cereals – such as wheat, barley and oats – it produces this year, according to European Commission data.
French cereal production is expected to drop by almost 8 megatonnes (Mt) in 2026, compared to 2025.
The chart above shows that most European countries, aside from Bulgaria, will also see production losses this year.
Germany is due to see the second-largest losses in production, dropping by almost 4Mt compared to 2025.
Prof Til Feike, a cropping systems expert at the Julius Kühn-Institut, says many areas in Germany and Austria, as with other parts of Europe, have been “hit hard by a long-lasting dry period in combination with record-high heatwaves”.
This has resulted in dry grassland for animals and lower yields of maize, which is a “key fodder crop” for livestock. He tells Carbon Brief:
“In the long run, farming must adapt better to more extreme weather conditions, not only heat and drought, but also prolonged wet periods. So, there is no one-fits-all solution for climate change adaptation.”
2. Most countries are recording reduced crop yields
Heat and a lack of water have “substantially worsened” crop expectations this summer in western and most of central Europe, according to a recent bulletin from the EU Joint Research Centre.
Yields are expected to be “significantly reduced”, with local crop failures “likely” in areas such as France, southern Germany, northern and central Italy, and Hungary, it added.
The chart below shows that yields of cereal grains – which, here, refers to the tonnes of a grain grown per hectare of land – are expected to fall in most EU countries in 2026.
Slovakia, Austria and Hungary are expected to see the largest declines in cereal yields, reducing by more than one tonne per hectare in 2026 compared to 2025.
The recent EU bulletin noted that irrigated crops performed well in Portugal this summer – the country with the largest yield increases. Other crops relying on rainfall showed growing signs of heat stress, it added.
3. Around €2bn worth of cereal losses after June heatwave
The record heatwave that hit many parts of Europe in June contributed to an estimated €2-2.3bn in cumulative grain production losses, as shown in the chart below.
The intense June heat in western Europe would have been “virtually impossible” just 50 years ago, according to a rapid climate attribution study. It was the region’s hottest June on record.
The Energy & Climate Intelligence Unit (ECIU) thinktank analysed June and July 2026 grain forecasts from Coceral, a European grain traders association.
ECIU estimated lost supply by multiplying the change in tonnes of grains between these two months by prices for harvest delivery in 28 European countries.
Major grain producers France, Germany, Hungary and Spain accounted for 86% of the lost revenue, according to the ECIU.
Extreme heat is also expected to have a wider economic impact across the continent. Analysis from Triodos Bank found that this summer’s extreme weather could reduce the EU’s gross domestic product (GDP) by around 1% this year, or around €180bn.
4. UK yields of wheat, barley and oats are all due to drop in 2026
If current trends continue, the average yields for cereals and oilseeds will result in the UK’s worst harvest since detailed records began in 1984, according to ECIU.
Barley yields could fall by 15%, oats by 14% and wheat yields by 6% year-on-year, according to 2026 harvest surveys from the Agriculture and Horticulture Development Board, a non-departmental public body that provides agricultural data to the UK government.
ECIU said that, even if the situation improves, this year is still expected to be one of the five worst harvests on record. This means that four of the five worst harvests in the UK have occurred in the past decade.
Consumers will likely see higher prices and/or smaller vegetables in supermarkets as a result, Tim O’Malley, chairman of UK company Nationwide Produce, told BBC News in August.
Other crops, such as berries, have grown successfully in the extreme heat. But the Guardian noted fears this could dip later this year “as plants become exhausted from heavy cropping during the heatwave”.
5. Maize production in France is due to hit a four-decade low
France has been acutely affected by this summer’s extreme weather, with more than 7,300 excess deaths during heatwaves and a record number of weather stations recording temperatures of above 40C.
The country is the EU’s largest agricultural producer, but heat, drought and wildfires have affected many crops.
The chart below shows that maize production is set to drop by more than one-third (35%) year-on-year.
This could result in France’s lowest maize production since 1980, according to data from Agreste, the country’s agriculture ministry’s statistics service.
Due to the heat, “record-early” grape harvests have also been recorded in various parts of the nation since mid-July, reported Le Monde. In some cases, this means “smaller, less juicy grapes, which will yield less wine”, explained the newspaper.
6. Declines in EU grains since 2025
Overall in the EU, data and projections indicate declines in the output of cereal grains this year.
Cereal production is set to fall by 9% compared to 2025, according to the European Commission.
Just one year in the past decade – 2024 – recorded lower production levels.
Maize production is set to be particularly affected, with projections indicating a 13% drop, to 52Mt – the lowest level in the EU since 2007.
The post How this summer’s heat and drought impacted crops in Europe – in six charts appeared first on Carbon Brief.
How this summer’s heat and drought impacted crops in Europe – in six charts
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